Belle Fourche Pipeline Co. v. State, 86-144
| Decision Date | 16 December 1988 |
| Docket Number | No. 86-144,86-144 |
| Citation | 766 P.2d 537 |
| Parties | BELLE FOURCHE PIPELINE COMPANY, a Wyoming corporation, and Eighty-Eight Oil Company, a partnership, Petitioners, v. The STATE of Wyoming, the Environmental Quality Council of the State of Wyoming, Randolph Wood, as Director of the Department of Environmental Quality, Roger Shaffer, as Administrator of the Land Quality Division of the Department of Environmental Quality, and Thunder Basin Coal Company, Respondents. |
| Court | Wyoming Supreme Court |
R. Stanley Lowe and Manuel A. Lojo, Casper, for petitioners.
A.G. McClintock, Atty. Gen., Stephen R. Shanahan, Sr. Asst. Atty. Gen., and Michael N. Patchen, Legal Intern, for respondent, State of Wyoming.
Marilyn S. Kite and Lawrence J. Wolfe, Holland & Hart, Cheyenne, for respondent, Thunder Basin Coal Co.
Before CARDINE, C.J., THOMAS, URBIGKIT and MACY, JJ., and BROWN, J., Retired.
The problem that must be solved in this appeal is whether a long-term lessee of land or the holder of a right-of-way easement is a "surface landowner" or "surface owner," alluded to in §§ 35-11-406(b)(xii) and 35-11-416, W.S.1977, and entitled to the protection of the statutory provisions requiring consent of a "surface landowner" and the posting of a bond to protect the "surface owner or owners." Collateral questions are presented with respect to whether an administrative agency is required to consider questions raised concerning the validity of its rules in the context of a contested case hearing, and whether the Wyoming Department of Environmental Quality, Land Quality Division Rules and Regulations, Ch. IV, § 3.k. (1985) [hereinafter Ch. IV, § 3.k.] (relating to a requirement that mining operations be conducted in order to minimize disruption of any services provided by facilities within the permit area) is lawful. The Environmental Quality Council (EQC) granted a coal mine permit in response to the application of Thunder Basin Coal Company without affording Belle Fourche Pipeline Company and Eighty-Eight Oil Company the protection afforded by §§ 35-11-406(b)(xii) and 35-11-416, W.S.1977. It held that the applicant had met its burden of proof in demonstrating that the application was in compliance with applicable state laws and that it was appropriate to invoke Ch. IV, § 3.k. Belle Fourche Pipeline Company and Eighty-Eight Oil Company appealed the decision of the Environmental Quality Council to the district court which certified the case to this court in accordance with our rules of appellate procedure. We affirm the decision of the Environmental Quality Council.
Belle Fourche Pipeline Company (Belle Fourche) and Eighty-Eight Oil Company (Eighty-Eight) state the issues in this way:
Thunder Basin Coal Company (Thunder Basin) frames the issues as follows:
The State of Wyoming, on behalf of the EQC, articulates these issues:
We will address whether either a long-term lessee of the surface or the holder of a right-of-way easement comes within the terms "surface landowner" or "surface owner" as used in §§ 35-11-406(b)(xii) and 35-11-416, W.S.1977; whether the EQC was required to consider the validity of its rules in the context of a contested case hearing; and, if so, whether Ch. IV, § 3.k. is lawful. The resolution of these questions is dispositive of this case and, for that reason, it is not necessary to address the questions posed in Issue II urged by Belle Fourche and Eighty-Eight and Issue III presented by Thunder Basin.
On November 1, 1967, Atlantic Richfield Company (ARCO) obtained Federal Coal Lease No. W-3446, which granted ARCO the right to mine coal by surface mining methods. That lease covered the coal in Section 21, Township 46 North, Range 70 West, 6th P.M., in Campbell County, Wyoming, as well as other lands. Robert Deaver and Freda Dunlap owned the surface estate in Section 21, and, on May 1, 1970, they leased a portion of that section to Black Hills Oil Marketers, Inc., for a term of ninety-nine years. That lease was assigned to Eighty-Eight, which operates a truck receiving station for oil on the property. The station is equipped with a tank, pumps, meters, valves, piping, ladders, and other equipment, and annually it receives approximately 10,000 barrels of oil from producing wells in the area which are outside the subject property.
In November of 1970, Robert Deaver and Freda Dunlap granted to Belle Fourche a right-of-way for oil and gas pipelines across portions of Section 21. In February of 1971, they granted a second right-of-way to Belle Fourche for oil and gas pipelines. Belle Fourche constructed, and continues to operate, two common carrier oil pipelines, which serve Eighty-Eight's truck receiving station and are situated in part within Section 21.
On November 3, 1976, ARCO acquired the surface of Section 21 pursuant to a warranty deed from Robert and Evelyn Deaver. The record does not disclose whether Freda Dunlap still held an interest in the surface of Section 21, but the record seems to assume that ARCO acquired complete ownership to the surface subject to "all rights of way, easements, exceptions, reservations and any and all instruments of record as of the date of this Warranty Deed, the provisions of which instruments touch and concern, or pertain to, the lands conveyed hereby." There is no question that Eighty-Eight and Belle Fourche had recorded the lease and the easements and that the acquisition by ARCO of the surface estate was subject to those interests.
ARCO applied to the Department of Environmental Quality (DEQ) for a permit to mine Section 21. The DEQ then issued to ARCO a Permit to Mine and a License to Mine, No. 483, effective March 16, 1979. That permit authorized ARCO to begin mining operations in what was designated as the Coal Creek Mine within the designated permit area for a period of five years. The permit accorded with the interim program adopted by the State of Wyoming pursuant to the Federal Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201-1328 (1977) (SMCRA). ARCO began construction of the Coal Creek Mine in the permit area in 1979, and actual production of coal commenced in 1982.
In the meantime, in December of 1980, ARCO filed an application for modification of its existing interim permit for the Coal Creek Mine. The purpose of that application was to bring that permit into compliance with what had become Wyoming's permanent state program under SMCRA. Among other things, that application provided all utilities, including oil and gas pipelines, would be relocated away from the active mining area prior to the initiation of surface mining activities. The DEQ approved the new application after finding that it was technically complete. Notice of that application was published in March of 1985, and that notice was sent to the owners of record of surface rights within the permit area including Eighty-Eight and Belle Fourche.
Various objections were filed opposing the issuance of the permit to mine which, with the approval of the DEQ, had been transferred from ARCO to Thunder Basin, a wholly-owned subsidiary of ARCO. Eighty-Eight and Belle Fourche presented objections to the issuance of the permit. These entities alleged that the proposed mining activities sought in the permit application would require a removal of their facilities which are located within the permit area, or would result in a cessation of their operations. Eighty-Eight and Belle Fourche refused to withdraw their objections, and a contested case hearing was held before the DEQ's Environmental Quality Council on September 10, 1985. Belle Fourche and Eighty-Eight agreed to limit their objections to the area which would be impacted by Thunder Basin's proposed mining operations during the first five-year term sought under the permit which expires in 1988.
Following the hearing, the EQC issued its Findings of Fact, Conclusions of Law and Order, granting Thunder Basin a permit to mine and rejecting the contention of Belle Fourche and Eighty-Eight that they were entitled to the protections provided in the consent and bonding provisions of §§ 35-11-406(b)(xii) and 35-11-416, W.S.1977. Belle Fourche and Eighty-Eight then filed their petition for review of the decision of the EQC in the District Court of the Sixth Judicial District in and for Campbell County....
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